Boeing and Embraer have proposed a joint venture that would see the US aerospace giant pay approximately $3.8bn for an 80 per cent stake in the Brazilian manufacturer of civil and military aircraft.
The companies have signed a Memorandum of Understanding to establish the strategic partnership, which will see Embraer holding the remaining 20 per cent stake.
“The agreement with Boeing will create the most important strategic partnership in the aerospace industry,” said Paulo Cesar de Souza e Silva, Embraer’s president and chief executive officer. “The business combination with Boeing is expected to create a virtuous cycle for the Brazilian aerospace industry, increasing its sales potential, production, creating jobs and income, investments and exports.”
Boeing will assume control of operations and management of the new company, which will have a Brazil-based management team.
In a statement Boeing said the joint venture will become one of its centres of excellence for end-to-end design, manufacturing, and support of commercial passenger aircraft, and will be fully integrated into the company’s broader production and supply chain.
Once established, the new company will be able to offer a commercial airplane portfolio that ranges from 70 seats to over 450 seats and freighters. In addition, both companies will create another joint venture to promote and develop new markets and applications for defence products and services.
“By forging this strategic partnership, we will be ideally positioned to generate significant value for both companies’ customers, employees and shareholders,” said Dennis Muilenburg, Boeing’s chairman, president and chief executive officer. “This important partnership clearly aligns with Boeing’s long-term strategy of investing in organic growth and returning value to shareholders, complemented by strategic arrangements that enhance and accelerate our growth plans.”
The transaction is expected to close by the end of 2019, pending approvals.